Renovate Your Space: A Guide to Home Improvement Loans

October 9, 2023

Despite ongoing inflation, nine in ten homeowners plan to complete at least one home improvement project in 2023. There are two big factors motivating homeowners to make improvements right now: pure enjoyment and absolute necessity (to fix something that’s broken).

Whether your upcoming home improvement projects involve longtime wishlist items or constant headaches like a leaky basement, funding is often the factor that keeps projects on hold.

SECU offers flexible funding opportunities to help homeowners pay for renovations and repairs. Keep reading to learn the average costs and return on investment for popular home improvement projects. Plus, get clarity on how to decide which funding option is best for your renovation project.

Financing home improvement projects in Maryland

Home improvements can be costly, but they’re likely to pay off.

Regardless of whether you’re making cosmetic upgrades or behind-the-scenes fixes, investments in your home usually pay off in the long run. In fact, the average home improvement project delivers a 69% return on investment (ROI). However, the range in returns varies widely depending on what type of project homeowners take on.

Not all types of home improvement projects deliver the same return on investment.

The most common home renovation projects are kitchen and bathroom renovations, which deliver a strong ROI. Kitchen upgrades deliver a 67% return on average, and bathrooms can drive a 63% return. However, the highest ROI remodeling projects allow homeowners to recoup more than 100% of their initial investment on average.

The highest ROI home improvement projects on average:

  • Refinishing hardwood floors – 147%
  • New wood floors – 118%
  • Insulation upgrades – 100%
  • New roofing – 100%
  • Garage door installation – 100%

Some remodeling projects offer long-term energy savings.

Insulation upgrades and vinyl windows can help homeowners reduce their energy usage. For instance, proper insulation can save homeowners up to 20% on heating and cooling costs.

When deciding what projects to take on, don’t lose track of your motivation.

Is this home forever or for now? If you plan to sell, then focus your investments on projects that will increase your home’s value later. Those who plan to stay for the foreseeable future may choose to focus on upgrades that make the home more livable, comfortable, or affordable. Whatever your long-term plan may be, it’s important to keep that in mind when budgeting and financing your home improvement project.

Funding your next home project

How much do home improvements cost in Maryland?

The average cost for home improvement projects varies across the state, but you’re likely to pay more for a licensed contractor in the suburbs of Washington, D.C. than you are on Maryland’s Eastern Shore.

Small kitchen projects with lower-end finishes and appliances cost $60k on average in Maryland, while large-scale renovations with high-end furnishings often run well above $100k. Bathroom remodeling is a more modest investment, costing between $25k and $75k on average. Naturally, the more luxurious the renovation, the higher the project cost.

How do people usually pay for home improvements?

Most homeowners pay for improvements out of pocket or with money they’ve kept in savings. The second most popular payment method is credit cards. 37% of homeowners put improvements on credit cards. However, credit card interest rates are high, and homeowners can save money on interest by opting instead for home improvement loans.

If paying for large-scale projects out of savings is more your speed, check out our guide to SECU savings accounts to find the best option for your long-term savings goals.

What are home improvement loans?

Home improvement loans help homeowners pay for major expenses like renovations and repairs. These can be used for just about any home improvement project, from structural repairs to full-scale house flipping.

Even when you opt to do it yourself, the costs of home improvement projects can add up fast. Plus, it’s important to allot space in your budget to surprise expenses that crop up throughout the renovation process. It’s not uncommon for homeowners to discover problems that need addressing before they can make progress on other projects.

How do home improvement loans work?

Before taking on a home improvement project, research your funding options. Compare your loan options to find the best financing solution for the scale of your home improvement project.

SECU offers a variety of flexible, competitive-rate financing options to help homeowners tackle that leaky roof or unfinished basement, including SECU’s unsecured Home Improvement Loan and home equity line of credit (HELOC). Compare these different home improvement funding options below. 

Home Improvement Loans: Leverage an unsecured loan to put in a new kitchen, build an outdoor retreat, or convert your basement into a family entertainment center.

  • Collateral: These loans don’t require collateral. If you default on a home improvement loan, you will not be at risk of losing your home. 
  • Interest rates: Because these loans don’t have collateral, they’re a little more risky for financial organizations to take on. Interest rates are typically higher for these loans than HELOCs as a result.
  • Loan amount: Borrowing limits on these loans are typically lower since there is no collateral.
  • What they’re best for: SECU Home Improvement Loans are best suited to small and medium-sized projects with a set budget. Upgrade finishings, invest in energy efficient windows, or add some luxury to a guest bathroom.

Home Equity Line of Credit (HELOC): Tap into your home’s equity to fund long-term goals like home improvements

  • Collateral: HELOCs are secured by your home’s equity. Defaulting on this line of credit could put your home at risk of foreclosure.
  • Interest rates: Because they’re secured by your home, these loans typically offer lower interest rates than personal loans – often making them the more affordable option.
  • Loan amount: The amount you can borrow depends on the value and available equity in your home. This is usually higher than the sum offered for personal loans.
  • What they’re best for: For big-budget home remodeling projects (think full kitchen remodel complete with updated, high-end appliances) HELOCs typically offer larger sums at lower interest rates.

Bring your vision to life with SECU

Whether you’re upgrading the family entertainment space or replacing a weathered roof, SECU has competitive-rate funding options to help you upgrade your home. How to get a home improvement loan: Apply now to get started.

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